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Everything You Need to Know About Pension Pots

Your pension pot is the total amount of contributions you save during your working life and any capital growth you earn from your fund’s investments. Your fund provider should update you annually on how much your pension pot is, and you can also request a report or visit their website for updates.

To put it simply, your pension pot is the fruit of your hard work, so you have to use it wisely. This article will give you a glimpse of everything you need to know about your pension pot.

When can you withdraw money from your pension pot?

Pension fund providers usually set a minimum age — usually 55 years — before they allow you to access your pension pot. However, there are some instances wherein you can withdraw your pension pot before the minimum age, such as early retirement due to poor health. Make sure to talk directly to your fund provider instead of talking to third-party persons, who are usually fraudsters. They might offer you false claims like doubling your pension pot or accessing it before the minimum age.

What are the ways to use your pension pot?

You are free to decide how you want to use your pension pots. You can ask for a comprehensive plan from your fund provider, and study each option before making a decision. Take your time and consider your family, partner, lifestyle, medical and future needs. Deciding how to manage your pension can be a laborious task since each option has its own rules, benefits, risks, and fees. To ensure that you’ll make the best choice, you can look for an advisor near you. You can also try asking around for professional pension advice Kent so you can meet up regularly with your advisor.

Keep in mind that pension providers offer different options. It is good to talk to your fund provider first before planning anything. Here are some options you can choose from:

Do nothing. You can continue to invest your money in your pension scheme if you are still undecided on your next move.

Make cash withdrawals or lump sums. You can make several withdrawals from your pension pot like in a regular bank, or you can take everything in one go if you are planning to start a business. However, be extra careful when doing this, since you surely don’t want to waste your pension pot all at once.

Buying annuities.  An annuity is a contract between you and your provider that allows you to turn your pension pot into an annual pension. It is a safe way to ensure that you have a continuous source of income in the future. You can talk to different providers and ask them for personalised quotes, and then you can choose the provider who offers the best deal.

Investing in the stock market. You can transfer your pension and invest in the stock market. This option can either increase or decrease your money. This is a risky choice since your future income will not be stable, fees are expensive, and you can run out of money.

Make smart and informed choices, and talk to your family and financial advisor before spending your pension pot.